Lessons from 7-Eleven’s scam

A couple of weeks before I moved from Auckland to Melbourne in 2014, I sat in a breakout session at Community Law Centres of Aotearoa’s annual conference and heard confirmation of what I’d more or less anecdotally experienced for a while – that if someone walked into my office and told me they weren’t getting minimum wage, there was no official body I could take the claim to.

Several of us sat in a two-star conference room and heard from representatives of the Ministry of Business, Innovation and Employment. Somewhere, in that much merged and much maligned portfolio, rested the old New Zealand Department of Labour’s Inspectorate – the equivalent of the Australian Fair Work Ombudsman.

Officials told us how the ministry would be devoting its resources going forward (there was a lot of ‘going’ or ‘looking forward’, and also a lot of ‘at the end of the day’) to the worst mass breaches of minimum wages and conditions –crackdowns on mass exploitation of migrants, in efforts that fell somewhere between a sting on bad employers and a sting on illegal workers.

The smaller one-off cases that came through our doors – unscrupulous small businesses dealing with one or two underpaid international students, keeping them in penury but not quite sweatshop conditions – were to be dealt with in a more self-sufficient way.

Community lawyers were advised to gather proof of pay slips, wages and time records from employers – then take the fruit of our investigations to the ministry and join the queue. Without the powers of a public body, this meant a lot of being hung up on, a bit of being told to fuck off, and not a hell of a lot of results for the client.

To say this was dispiriting was an understatement. Not being paid minimum wage isn’t some sort of civil matter for unfair dismissal unions and advocates – a ‘they say/we say’ to be hashed out by mediation and tribunal. It’s a black letter bottom line that we depend on the state to step in and enforce. In New Zealand in 2014, they’d stepped back.

When I moved to Australia, I had to learn a lot about workplace relations law very quickly.

At first, I was buoyed by the elaborate minimum protections of the modern award system, the relative strength of unions, and Fair Work’s avid press releasing about its stings on weird little Mum and Dad eateries in Launceston. Political action to undermine those systems was mired in the federal senate: a frozen cascade of belligerent and overlapping legislation that no-one sitting crossbench wanted to touch.

That legislation, most of it unlikely to pass in any recognisable form, is a godawful waste – and I mean that as a word of advice to its cheerleaders. It’s not needed if you want to further casualise the Australian workforce, gradually depress its working conditions, take advantage of migrant labour and money. Why take offensive action when inaction will do?

In August, Fairfax and ABC went in halfsies on a great piece of investigative journalism on how 7-Eleven franchisees operate in Australia. The ‘half pay scam’ Adele Ferguson and Sarah Danckert identified wasn’t elaborate – pay people for half the hours they actually work, then cook the books – but the trap that kept the employees in there, most of whom were international students, was a vicious one.

Should anyone overworked and underpaid eventually raise their hand to complain, they would be pointed to the breach of their own visa conditions (international student visa holders can usually only work a maximum of 20 hours, a limit their masters are obligated by law to be aware of) and their employer would threaten to dob them in.

The report’s cracking work was built on the testimony of a whistleblower from 7-Eleven’s head office, a self-styled consumer advocate, and young workers who were brave enough to come forward in a country that had offered them only hostility and blackmail.

Somewhere in the mix, the FWO, who should be the ones policing this, came forward to say their piece as well, citing three raids on 7-Eleven stores in six years. They say they’re investigating the role of head office, and it’s going to lead to a set of recommendations in 2016. The lack of scrutiny in the wider story flatters them. The picture of a plucky bunch of civilians and hardnosed reporters coming together to do the nominal job of the national enforcement agency is a cute one, but it’s also chilling. It’s like reading kids’ mystery novels through adult eyes – if the Hardy Boys are solving the murders, how rubbish are the cops?

A bruising Senate inquiry public hearing in Adelaide on 14 July this year was less sanguine about how the FWO’s been faring, and was marked by the rumours about 7-Eleven’s operations that Ferguson and Danckert later confirmed. Under the questioning of NSW Labor Senator Deborah O’Neill, the FWO’s system of enforceable undertakings and moderately serious conversations with the well-heeled and well-represented end of town came in for heat:

Senator O’Neill: There are also former instances where there have been enforceable undertakings by particular companies. I refer to the 7-Eleven stores, which are known to you and have used practices in the past that certainly helped them fall foul of the law. In terms of the 7-Eleven business model currently, what are you doing to watch these people, this business structure that is already known to have been compromised in the past? How can you guarantee that what is going on in that organisation is within the law now? What are you doing?

Michael Campbell, Deputy Fair Work Ombudsman : The Fair Work Ombudsman has had instances before where we have found employment record keeping practices at 7-Eleven outlets that contravene workplace law…I am not going to tell you that is a systemic practice across 7-Eleven because I do not have that evidence. What I will say is that outlets like 7-Eleven are an area of focus for our operations, and practices like that are those which we are seeking to shine a light on but also address. So that is about as far as I can comment on that at the moment.

Senator O’Neill: Is it true, Mr Campbell, you have already undertaken that kind of a process on two previous occasions with 7-Eleven, and yet again it is your focus?…We go through all of this process with an employer that is proven to be untrustworthy, proven to be exploiting workers, and then another three or four years later down the track we are going back over the same territory. Surely, there is something wrong with this process. Is it the problem with the law? Is the law inadequate or is the current regulatory structure, of which you are a part, inadequate?

Natalie James, Fair Work Ombudsman: Where we see a pattern of complaints or a pattern of conduct coming to us, we do actively pursue those matters. I would also just observe that my understanding of organisations like 7-Eleven is they do operate on a franchise basis. So sometimes what you see in some franchises is not indicative and is not a sign that there is an issue at head office, so to speak, and sometimes it is.

After the ABC/Fairfax 7-Eleven story broke, the same Senate Committee held another one-off public hearing focussing on what it turfed up. This time, the FWO team were able to report that they had seen ‘systemic and deliberate falsification of records … over a number of years’.

Speaking before the same hearing, the Shop Distributive and Allied Employees Association’s Gerard Dwyer said it had ceased to be realistic to expect the FWO to enforce labour laws in this country. Consumer advocate Michael Fraser told members he chose not to bring his own findings to the FWO – having seen their results and claims that the underpayments were the product of a few bad apples, he deemed Fair Work’s findings neither diligent nor helpful.

Elsewhere, one 7-Eleven worker who came forward told the Senate his employer was given a month’s grace to provide wage and pay records when the FWO first contacted him. Employers continue to steal from employees until a leisurely investigation ends the arrangement. Of course, it’s hard to imagine a worker who stole from their boss getting the same free reign to cover their tracks.

This isn’t to say that the FWO is being duplicitous, or that it’s ideologically predisposed not to act on these matters, or anything of the sort. In these sessions, the agency’s heads get asked a number of times about the adequacy of their funding. Even reading the transcripts, you can practically hear them grit their teeth as they patiently defer to the federal government’s wisdom on this count. Obviously, they’re not equipped or staffed to take action in the face of indentured labour conditions that defy belief.

But keeping Fair Work under-resourced is a choice, and it has repercussions. Widespread and unanswered sub-minimum conditions manage to gently undermine the standards other workers can expect – meaning politicians don’t have to expend their own capital on WorkChoices-style agreements and penalty rate cuts. Meanwhile, unions stretched to capacity trying to do the enforcement work of the state over tiny sites at unsociable hours have less time to build, transform or reclaim, and must instead settle for preserving the status quo.

The choice to maintain a regime for working international students that opts not to even offer them the pat gesture of a temporary visa amnesty to keep coming forward, or the same access to the General Employees Entitlements and Redundancy Scheme residents do, accomplishes the same ends. It also reinforces a tendency to treat vulnerable young people who have come to Australia as cash cows, the vast amounts they contribute as individuals to the ‘education export sector’ not reciprocated with basic gestures of care and responsibility.

Changing employment law in Parliament can create a lower floor, but at least there’s a floor. The FWO still does a lot of good work – but there’s nothing inherent in the legal structure of Australia’s workplace relations system to stop it from dwindling, avoiding more of the big fights, and eventually becoming two guys in suits with a projector telling community groups to ask the boss nicely for full pay records. Neither they, nor the media, can actually prosecute anyone.

The change of PM has got a lot of the old ideological warriors braying, the kind of rusted-on lifers that attend HR Nicholls events like they were Grateful Dead gigs. They’ll howl that Malcolm Turnbull needs to deal to the unions and create true idyllic freedom of contract between employer and servant under parliamentary urgency.

But Turnbull’s more astute than that. If he wanted to go about the same thing, he could do a lot worse than do nothing. Let the regulator keep missing tricks, let the flow of underpaid students come and go, let the media spotlight pass. In other words, let the new, laissez-faire Australian labour market happen by neglect.